H.B. No. 2339
 
 
 
 
AN ACT
  relating to trade-in credit agreements offered in connection with
  certain motor vehicle retail installment contracts.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 348.001, Finance Code, is amended by
  adding Subdivision (11) to read as follows:
               (11)  "Trade-in credit agreement" means a contractual
  arrangement under which a retail seller agrees to provide a
  specified amount as a motor vehicle trade-in credit for the
  diminished value of the motor vehicle that is the subject of the
  retail installment contract in connection with which the trade-in
  credit agreement is offered if the motor vehicle is damaged but not
  rendered a total loss as a result of a collision accident, with the
  credit to be applied toward the purchase or lease of a different
  motor vehicle from the retail seller or an affiliate of the retail
  seller. A trade-in credit agreement is a separate agreement from a
  retail installment contract and is not a term of the retail
  installment contract. 
         SECTION 2.  Section 348.005, Finance Code, is amended to
  read as follows:
         Sec. 348.005.  ITEMIZED CHARGE.  An amount in a retail
  installment contract is an itemized charge if the amount is not
  included in the cash price and is the amount of:
               (1)  fees for registration, certificate of title, and
  license and any additional registration fees charged by a deputy as
  authorized by rules adopted under Section 520.0071, Transportation
  Code;
               (2)  any taxes;
               (3)  fees or charges prescribed by law and connected
  with the sale or inspection of the motor vehicle; and
               (4)  charges authorized for insurance, service
  contracts, warranties, automobile club memberships, trade-in
  credit agreements, or a debt cancellation agreement by Subchapter
  C.
         SECTION 3.  Subchapter B, Chapter 348, Finance Code, is
  amended by adding Section 348.125 to read as follows:
         Sec. 348.125.  TRADE-IN CREDIT AGREEMENTS OFFERED IN
  CONNECTION WITH RETAIL INSTALLMENT CONTRACTS.  (a)  A retail seller
  may, at the time a retail installment contract is executed, offer to
  sell to a retail buyer a trade-in credit agreement or similarly
  named agreement. 
         (b)  A trade-in credit agreement is not considered an
  insurance product.
         (c)  To ensure the faithful performance of a retail seller's
  obligations to a retail buyer under a trade-in credit agreement,
  the retail seller must be insured under a contractual liability
  reimbursement policy approved by the commissioner of insurance and
  issued for the benefit of Texas residents.
         (d)  In addition to other disclosures required by state or
  federal law, if a retail seller offers to a retail buyer a trade-in
  credit agreement, the retail seller shall give the retail buyer at
  the time the retail installment contract is executed a copy of the
  written trade-in credit agreement and written notice that the
  retail buyer:
               (1)  is not required to purchase the trade-in credit
  agreement as a condition for approval of the retail installment
  contract; 
               (2)  is entitled to cancel the trade-in credit
  agreement before the 31st day after the date the retail installment
  contract is executed and receive a full refund;
               (3)  may terminate the trade-in credit agreement at any
  time on or after the 31st day after the date the retail installment
  contract is executed and receive a pro rata refund minus any
  applicable cancellation fee which may not exceed $50; and 
               (4)  has been provided a clear and concise disclosure
  of the amount of the credit available during the term of the
  trade-in credit agreement.
         (e)  The amount charged for a trade-in credit agreement
  offered in connection with a retail installment contract may not
  exceed five percent of the cash price of the motor vehicle that is
  the subject of the retail installment contract, including any
  attached accessories and excluding the price of services related to
  the sale, the price of service contracts, taxes, and fees for
  license, title, and registration. 
         (f)  A trade-in credit agreement must require the retail
  buyer to provide proof of insurance settlement documents in order
  to obtain the credit. A trade-in credit agreement may not require
  the retail buyer to provide any other documentation in order to
  obtain the credit.
         (g)  If a retail seller enters a trade-in credit agreement
  with a retail buyer, the retail seller must comply with the terms of
  the trade-in credit agreement in connection with the purchase or
  lease of a subsequent motor vehicle.  A retail seller must provide
  any credit required under a trade-in credit agreement at the time of
  the purchase or lease of a subsequent motor vehicle.
         (h)  The benefit to be provided in connection with a trade-in
  credit agreement must bear a reasonable relationship to the amount
  charged for the trade-in credit agreement and the amount, term, and
  conditions of the retail installment contract.
         SECTION 4.  Sections 348.208(b) and (c), Finance Code, are
  amended to read as follows:
         (b)  A retail installment contract may include as a separate
  charge an amount for:
               (1)  motor vehicle property damage or bodily injury
  liability insurance;
               (2)  mechanical breakdown insurance;
               (3)  participation in a motor vehicle theft protection
  plan;
               (4)  insurance to reimburse the retail buyer for the
  amount computed by subtracting the proceeds of the buyer's basic
  collision policy on the motor vehicle from the amount owed on the
  vehicle if the vehicle has been rendered a total loss;
               (5)  a warranty or service contract relating to the
  motor vehicle;
               (6)  an identity recovery service contract; [or]
               (7)  a debt cancellation agreement if the agreement is
  included as a term of a retail installment contract under Section
  348.124; or
               (8)  a trade-in credit agreement.
         (c)  Notwithstanding any other law, service contracts, [and]
  debt cancellation agreements, and trade-in credit agreements sold
  by a retail seller of a motor vehicle to a retail buyer are not
  subject to Chapter 101 or 226, Insurance Code.
         SECTION 5.  This Act takes effect September 1, 2017.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 2339 was passed by the House on May 4,
  2017, by the following vote:  Yeas 143, Nays 0, 2 present, not
  voting.
 
  ______________________________
  Chief Clerk of the House   
 
 
         I certify that H.B. No. 2339 was passed by the Senate on May
  24, 2017, by the following vote:  Yeas 31, Nays 0.
 
  ______________________________
  Secretary of the Senate    
  APPROVED:  _____________________
                     Date          
   
            _____________________
                   Governor